Intertanko, the global tanker association, has painted a grim picture of the industry and a warning about the sector's future.
Surely the outlook cannot be that bad?
Unfortunately it is, according to the influential group. "The tanker market has yet again fallen back and … is again at rock bottom," it said on its website. "At the same time, the scrapping of tankers is very slow and we have only seen two tankers reported sold for demolition in September. The total figure for the year is 108 tankers totalling 8.9 million tonnes.
"Only a handful of tankers have also been sold for conversion this year," Intertanko added in its downbeat assessment of the industry.
What have been the main reasons for the slump?
A key problem has been the global economic slowdown. "The low freight market naturally impacts investments in tankers, both new-building and second-hand," said Intertanko. "According to Clarksons [an international ship brokers], second-hand tanker prices are steady and the few sales give little indication of actual price levels. Ordering activity is even lower than second-hand tanker sales activity. The order-book this year [for new tankers] is set to be about the same level as last year, which was the lowest since 1995 in [tonnage] terms."
Companies in the industry must be suffering?
Yes is the simple answer. One of the biggest tanker owners is China Shipping and the company is waiting for the industry to emerge from this downturn before buying new vessels."[The] China Shipping president Xu Lirong said that the company plans to build 10 VLCCs [very large crude carriers], and may order 10 more if the market conditions are right," reported Intertanko. "He did not say, though, when the orders would be placed. We trust that China Shipping will understand that second-hand acquisitions will be a better option than new-buildings when looking at the forward market prospects."
Is there any good news on the horizon?
Not even a speck. "It is hard to see any upside in the tanker market at the moment," warned Intertanko. "Economic growth is, at best, seen to be moderate, even with extra money being poured into the economy both in the [United States] and China. Oil consumption is still increasing but the consumption increase in China is lower than it was. And the increases in oil producing areas such as the Middle East does not do much good to the tanker market."